ACH deal is heartening

Thursday

Feb 21, 2013 at 2:00 AM

The proposed acquisition of Ashland Community Hospital by Medford's Asante Health System no doubt raises fears among ACH employees and some members of the community. But whatever those fears, any suggestion that the deal be dropped raises something else: the very real possibility that Ashland could be without a hospital altogether.

The proposed acquisition of Ashland Community Hospital by Medford's Asante Health System no doubt raises fears among ACH employees and some members of the community. But whatever those fears, any suggestion that the deal be dropped raises something else: the very real possibility that Ashland could be without a hospital altogether.

So we were heartened to see the unanimous vote by the Ashland City Council to approve a letter of intent to merge with Asante, which operates Rogue Regional Medical Center in Medford and Three Rivers Medical Center in Grants Pass.

In truth, the merger is almost certain to become an acquisition. Under the tentative agreement, Asante would become the sole shareholder in the Ashland Community Hospital Corp., a status now held by the city of Ashland. If, within three years, Asante reneged on its plan to maintain ACH as a full hospital, the property and facilities would revert to the city. Beyond that time frame, it would not revert, although there are financial penalties built in for up to 12 years.

Some may question why the city would want to give up any say over a hospital that once was a city department and whose future is still partially controlled by the city at present. But those who understand the situation know there is really little other choice.

Largely because of inadequate Medicaid and Medicare payments, ACH is awash in red ink, running a deficit of more than $3 million in the most recent fiscal year. Hospital officials say it cannot survive another year on its own. Asante faces many of the same issues with the federal payments for the poor and elderly, but its size allows it to absorb those losses more easily, although not painlessly.

ACH's first choice as a partner, Dignity Health, eventually pulled out, motivated in part by community protests over its positions on abortion and physician-assisted suicide. But rest assured, an organization that large was not scared off solely by protests. If this were an easy money-maker, Dignity would still be on board.

The merger/acquisition by Asante makes more sense financially because a number of functions — areas such as administration, finance and purchasing — can be consolidated. It also makes sense for Asante, which needs to enlarge its footprint and strengthen its position in a health care marketplace that is going to change dramatically in coming years.

Talk of consolidation sounds like lost jobs for ACH, and that will probably happen. That's worrisome for Ashland because ACH is the community's third largest employer with 400 workers and its annual payroll of $25 million provides the highest average wage in town.

But considering the options facing a failing institution, the prospect of keeping most of those jobs is appealing. Beyond that, Asante has said ACH employees will be treated like Asante's own and be given opportunities to fill vacancies elsewhere in the organization if their job is eliminated in Ashland.

During the Dignity discussions, some argued that ACH must be left entirely whole, with no job losses and no changes in services. That's just not realistic. The city of Ashland should fight to preserve as many jobs as possible as it negotiates the final deal, but it would be a deal-killer to demand that Asante not take advantages of obvious savings.

Ashland Community Hospital almost certainly will changed — and likely get smaller in some areas — if the deal is approved. But Asante's proposal seems fair and the best option for ensuring that the community of Ashland continues to have a hospital, even if the city of Ashland no longer has any control over it.